Personal Finance

Investment Property Mortgages

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  • Dec 22nd, 2014 7:08 pm
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Jr. Member
Apr 17, 2014
110 posts
13 upvotes
Toronto, ON
BrandonLowi wrote: Just a FYI - though a mortgage broker, we can use 100% offset calculations. EG. You want to refinance a rental property, and currently have 3 other rentals. We can use 100% of the 3 additional rentals, minimum 50% of the subject rental, and your owner occupied would be 0% offset.

We use the difference as income or liability. This has a dramatic effect for clients on their TDS.

Please note, student rentals is a total difference ball game. Lenders are moving away from these homes.
Hi Brandon,

Does this apply in general or is this specific to certian lenders?
Deal Fanatic
User avatar
Nov 2, 2013
5697 posts
1522 upvotes
Edmonton, AB
seriousinvestor wrote: This is happening all over. Fifteen years ago you could find properties that produced very good cash flow. Nowadays I either look at an appreciation play or go to smaller but growing cities/towns that are not yet 'hot markets' but have potential.
In Alberta, many places you can. In Edmonton people cover their mortgage payments even with 5% down renting the rooms out... in many towns they're rampart with guys taking advantage of this. A lot of migrant workers drive up rents who don't actually want to move here..

Bedrooms typically fetch 600-700/month for smaller ones, 700-800 for larger. A 300-400k home can fetch 1800-2000+ a month.

However it's an area more vulnerable to oil prices (but then, you have places like Vancouver and Toronto inflated by foreign investment).
Accountant (Public Practice)
Jr. Member
Mar 4, 2013
134 posts
26 upvotes
Kingston
Specific. They include First National, Merix, National Bank, Street Capital, CMLS etc...a few more, mostly monoline lenders.
buxlo122 wrote: Hi Brandon,

Does this apply in general or is this specific to certian lenders?
Brandon Lowi - Mortgage Agent - The Mortgage Professionals - Lic.#10280
Jr. Member
Apr 17, 2014
110 posts
13 upvotes
Toronto, ON
BrandonLowi wrote: Just a FYI - though a mortgage broker, we can use 100% offset calculations. EG. You want to refinance a rental property, and currently have 3 other rentals. We can use 100% of the 3 additional rentals, minimum 50% of the subject rental, and your owner occupied would be 0% offset.

We use the difference as income or liability. This has a dramatic effect for clients on their TDS.
When the lenders are applying the 100% offset are they using the gross rent or the net rent (i.e. gross rent - r&m - taxes - insurnance - vancancy - property management)?
Jr. Member
Mar 4, 2013
134 posts
26 upvotes
Kingston
Gross Rent - P&I - Taxes - Insurance - Maintenance - Utilities.
buxlo122 wrote: When the lenders are applying the 100% offset are they using the gross rent or the net rent (i.e. gross rent - r&m - taxes - insurnance - vancancy - property management)?
Brandon Lowi - Mortgage Agent - The Mortgage Professionals - Lic.#10280
Jr. Member
Apr 17, 2014
110 posts
13 upvotes
Toronto, ON
BrandonLowi wrote: Gross Rent - P&I - Taxes - Insurance - Maintenance - Utilities.
Does the lender have standard ammounts for Insurance, Maintenance and Utilities. Or does the lender look at actuals/estimated figures of the property?

Does the lender still subtract utilities if the Gross Rent is exlusive of utilities?
BrandonLowi wrote: Just a FYI - though a mortgage broker, we can use 100% offset calculations. EG. You want to refinance a rental property, and currently have 3 other rentals. We can use 100% of the 3 additional rentals, minimum 50% of the subject rental, and your owner occupied would be 0% offset.
I was just going back through your example and wanted to query the "minimum 50% of the subject rental". Can you let me know if my logic below is correct:
I have a mortgage over my primary residence. This will partialy use up my GDS ratio.
If I am looking to purchase an investment property I can offset 50% of the gross rental income against my mortgage payments?
If I have any other rental properties I would need to include 100% of their net income/(expense) [Gross Rent - P&I - Taxes - Insurance - Maintenance - Utilities]


Follow up question; What GDS ratio percentages would a borrower need to satisfy in order to qualify for these mortgage?


Thanks for your help Brandon, this info is the info that I was looking for :D
Jr. Member
Mar 4, 2013
134 posts
26 upvotes
Kingston
They all differ. First National will use $100 per month for maintenance and fire insurance. Merix uses $0 for maintenance, and uses 5% of mortgage payment for Insurance. All estimates.

And you have the logic 100% completely correct. Most major banks will only use 50% offset for the additional properties. Using the Net Income tends to work out better.

If credit is less than 680, max gds/tds is 35/42 if abover 680, gs/tds can go to 39/44.
buxlo122 wrote: Does the lender have standard ammounts for Insurance, Maintenance and Utilities. Or does the lender look at actuals/estimated figures of the property?

Does the lender still subtract utilities if the Gross Rent is exlusive of utilities?



I was just going back through your example and wanted to query the "minimum 50% of the subject rental". Can you let me know if my logic below is correct:
I have a mortgage over my primary residence. This will partialy use up my GDS ratio.
If I am looking to purchase an investment property I can offset 50% of the gross rental income against my mortgage payments?
If I have any other rental properties I would need to include 100% of their net income/(expense) [Gross Rent - P&I - Taxes - Insurance - Maintenance - Utilities]


Follow up question; What GDS ratio percentages would a borrower need to satisfy in order to qualify for these mortgage?


Thanks for your help Brandon, this info is the info that I was looking for :D
Brandon Lowi - Mortgage Agent - The Mortgage Professionals - Lic.#10280
Jr. Member
Apr 17, 2014
110 posts
13 upvotes
Toronto, ON
If I am living in a house and I am wanting to move to a new property and keep the old one as an investment property. Will the lender recognise 100% on the net income based on a rental estimate?

Is there any limit to the number of properties before the lender starts to tighten there lending rules?

What is the maximum amortization period that the lender will allow?

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